The final rule issued in September 2013 adds comments to clarify the definition of valuation. Reg B implements the Equal Credit Opportunity Act (ECOA), which is regulated and enforced by the Consumer Financial Protection Bureau (CFPB). 29421. The disclosure of an applicant's right to receive the appraisal must be mailed or delivered no later than what day? 11. 10. Mr. and Mrs. Link have applied for a real estate loan with National Bank. Now, there is some good news. He asks if she would be agreeable to a loan for a lesser amount or for a shorter term. (a) Appraisals required. That’s not an evaluation. (1) In general. Appraisal guidelines may be triggered in instances when a borrower requests a renewal of an existing loan and a new appraisal/evaluation will be produced. Redlining is an unethical and frequently illegal practice that denies loans or services to people living in majority-minority communities. The final rule revises Regulation B to implement an ECOA amendment concerning appraisals and other valuations that was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). He is handling a real estate loan request that will be secured by a first lien on the subject property. Part 1002 - Reg B - Equal Credit Opportunity Act (ECOA) Compliance. The most important benefit of Regulation B is that it helps to prevent discrimination against women and minorities. Viewing 4 posts - 1 through 4 (of 4 total) Author. 1. Which option correctly lists the two methods National Bank should consider? These requirements are triggered by specific events and ... Regulation B, the Board has amended Regulation B to address the timing and delivery of electronic ... Rules on Providing Appraisal Reports (Section 202.14) (Appraisal report upon request and Notice of right to appraisal) OnDemand. Below is a comparison of the new 2014 appraisal rules with the appraisal rules that existed prior to January 18, 2014. Carmen Thomas is meeting with the loan officer of her bank, Mark Shellig, to discuss a loan she would like to get to make some repairs on the house she has lived in for 18 years. 2 12 U.S.C. Appraisal rules in Regulations B and Z were revised effective January 18, 2014. 195/Tuesday, October 8, 2019/Rules and Regulations 1 83 FR 63110 (December 7, 2018). 9. Under Reg B revisions, National Bank is required to notify the Link's in writing of their right to receive a copy of their appraisal or valuation. National Bank is considering two methods for evaluating credit applications. One file includes a consumer loan for $35,000, the second file includes a consumer loan of $25,000, and the third file includes a business loan for $50,000. Regulation B is intended to prevent applicants from being discriminated against in any aspect of a credit transaction. All lenders are required to comply with Regulation B, which protects applicants from discrimination. In the middle of the sample document they called it a Restricted Use Appraisal Report. Errors in credit reports are fairly common, and many people only find out about them after being denied credit. Posted By: nossa Re: New Reg B Appraisal Notices & Copies - 08/06/14 04:35 PM. 2. 9. Given the volume and complexity of the CFPB’s new mortgage rules related to Reg Z and Reg X, we haven’t focused much on the new Reg B appraisal rule. Redlining has often been used to discriminate against Black Americans. To which credit file does the coverage of ECOA and Regulation B apply? 81 Fed. The loan being secured by a 1-4 dwelling is the triggering factor. 12. Which option correctly lists an activity that is covered by ECOA. This could trigger a new three-day waiting period under the Appraisal Rule. He is responsible for collecting and processing loan payments, answering questions from potential applicants, taking loan applications, determining credit evaluation criteria, and developing marketing materials. On September 13, 2013, the CFPB amended the official interpretations of Regulation B to clarify that when the rule refers to appraisals or other valuation models, it does not include speculative opinions not based on an appraisal or other valuation model. Absent evidence of actual receipt by the applicant, delivery is deemed to have occurred on Thursday, December 5 ( i.e., three business days after mailing the appraisal). 3331 et seq. Home › Forums › Equal Credit Opportunity Act/Regulation B › Reg B Appraisal Rules – Esign. Which statement best describes the purpose of the Equal Credit Opportunity Act (ECOA)? Now that the rules have been in place for a year reports of violations are filtering in from examiners and auditors. Summary: The federal banking agencies (the Agencies) are issuing the attached Frequently Asked Questions (FAQs) on appraisal and evaluation functions. Joint intent must be evidenced at the time of application. Once people know the reason for the denial, there is a strong incentive to correct the credit reports and reapply. Amanda, a loan officer, has three loan files on her desk. One of the trigger events is a material agreement outside the ordinary course of business. Summary of Reg B Appraisal Rules Effective from 2014 Coverage of Appraisal: The appraisal rules apply to all appraisals and other written valuations developed in connection with the loan application. The original mortgage was paid years ago, but when she was in school, Karen took out an equity line of credit to complete some much needed repairs on the property. 3. 6. See. Accessed Sept. 4, 2020. Investopedia uses cookies to provide you with a great user experience. When his bank sends Josh the Regulation B required adverse action notice, what additional information must be included in that notice? Accessed Sept. 4, 2020. The Consumer Credit Protection Act of 1968 (CCPA) is federal legislation outlining disclosure requirements for consumer lenders. The disclosure of an applicant's right to receive the appraisal must be mailed or delivered no later than what day? The disclosure of the applicant's right to receive the appraisal must be mailed or delivered no later than what day? Josh's loan request was denied because his credit score was too low. appraisal is placed in the mail on Monday, December 2. Accessed Sept. 4, 2020. Whitney conducted three loan interviews and for each interview she considered the age of the applicant. This provision is now covered by the CFPB’s Regulation B rules. rules, and recordkeeping requirements. You can learn more about the standards we follow in producing accurate, unbiased content in our. The Consumer Financial Protection Bureau (Bureau) is now proposing a rule to implement those changes, which were enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). An application for credit that is to be secured by a first lien on a 1-4 family dwelling B. 6. Posted By: Dan Persfull Re: New Reg B Appraisal Notices & Copies - 08/06/14 03:20 PM. Which item is considered a valuation under Reg B rules that must be provided to his customer? Posts. 1. Both are permitted by the ECOA. During the loan interview, Mark expresses his concern that she may not qualify for the loan based on her current income and asks if her husband can cosign for her. 10. Which item is considered a valuation under Reg B rules that must be provided to his customer? 1002.14 Rules on providing appraisals and other valuations. Which option correctly lists two circumstances under which age can be considered? 3. She has come to the bank to get a loan to start her own business—a "Call" Center where consumers can inquire about the best places to purchase almost anything. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 2. The effects test is a method to assess the discriminatory impact of credit policies using demographic and statistical data. American Bank is using a credit score from Equifax as the sole criteria for determining creditworthiness. 4.48.6 Real Property Valuation Guidelines 4.48.6.1 Program Scope and Objectives 4.48.6.1.1 Background 4.48.6.1 2. Appraisals are professional judgments of the market value of real property based on a variety of market factors. Congress enacted the ECOA to ensure that financial institutions and firms dealing with credit make it equally available to all creditworthy customers. Appraisal Regulations Frequently Asked Questions Printable Format: FIL-62-2018 - PDF . Do the delivery rules apply? The Equal Credit Opportunity Act (ECOA) is a regulation that aims to give all legal individuals an equal opportunity to obtain loans. The Reg B appraisal rules are triggered by what event? Which applicant's loan triggers the Reg B appraisal rules? A. Redlining is the discriminatory practice of denying services (typically financial) to residents of certain areas based on their race or ethnicity. Based on the applicant's race, marital status, nationality, gender, age, or religion, Against an applicant whose income comes from a public assistance program, Against an applicant who, in good faith, exercised his or her rights under the, The spouse will be permitted to use the account, The spouse will be contractually liable on the account, The applicant is relying on the spouse's income as a basis for repayment of the credit requested, The applicant resides in a community property state or relies on property located in such a state as a basis for repayment of the credit requested. Which information item is not needed to comply with this requirement? The Appraisal Institute’s old Guide Note 13 offered an outline for an USPAP-compliant evaluation. The type appraisal utilized has no bearing on the notice requirement. 2. What Type of Applications are Covered? If a request is denied, Regulations B and V adverse action timing and notification requirement should be followed. The notice must explain why the applicant was rejected or give instructions for how the applicant can request this information. 5. An inquiry about loan rates and terms C. The refinance of a 20-unit apartment complex D. An application for an auto loan if the applicant plans to live in his car. (Comment 14(b)(3)-3) A: Not all documents that discuss or restate a property’s value are valuations. As a result, the earliest date that consummation may occur is 9. 4. Reg B Appraisal Rules. The Fair Housing Act is the federal law that forbids discrimination in housing based on race, sex, religion, nationality, disability, and family status. Regulation B also mandates that lenders provide oral or written notice of rejection to failed applicants within 30 days of receiving their completed applications. Mateo is a loan processor at Keyside Bank. Fulfill Your ECOA / Reg B Regulation Requirements. 4. Federal Reserve. Rather the rule follows the same risk-based review format of other Bank Secrecy Act (BSA) requirements. However, under … Question: Some items of Form 8-K are triggered by the specified event occurring in relation to the “registrant” (such as Items 1.01, 1.02, 2.03, 2.04). Thelma asks about the age of the car and about Mr. Cook's retirement income. Consumer Financial Protection Bureau (CFPB) changed the appraisal rules in Regulation B on January 18, 2013. Home › Forums › Compliance Masters Group (Members Only) › Reg B Appraisal Rules. The rule … 1. Rochelle applied for a loan to purchase a car, but was denied because her credit score was too low. Reg B outlines the rules that lenders must adhere to when obtaining and processing credit information. Specifically, it has 1) processed loan payments 2) filed currency transaction reports 3) determined credit evaluation criteria 4) sent thank you letters. The senior loan officer at County Bank has 4 loan applications on his desk. Comment 14(a)(1)-2 clarifies that creditors must provide copies of appraisals or other written valuations prepared in connection with credit renewals requested by the applicant. Chip knows, under Reg B revisions, that he is required to notify Jill in writing of her right to receive a copy of the appraisal or valuation. rules on providing appraisal reports, this amendment revises those rules. Revised Interagency Guidelines and new rules under Reg Z have been issued, and we've seen additional requirements finalized recently due to Dodd-Frank. Reacting to triggers is nor mal, but if we don't recognize them and respond to them appropriately, they may actually cause a downward spiral, making us feel worse and worse. The offers that appear in this table are from partnerships from which Investopedia receives compensation. 5. 3. Thelma tells Mr. Cook he will need to include information about his race, sex, marital status, and age on the loan application. The recession of 2007 to 2009 caused many mortgage lenders to tighten formerly acceptable rules. These include white papers, government data, original reporting, and interviews with industry experts. The CFPB lists credit transactions and aspects of credit transactions to include consumer credit, business credit, mortgage, and open-end credit. Reg B also helps anyone who is denied credit by requiring lenders to give them an explanation. This means that the borrower can waive this timing requirement and agree to receive the updated copy at or before consummation. The past few years have seen significant developments in real estate appraisals and evaluation rules and regulations. When a customer's loan request is denied because his or her credit score was too low, what additional information must be included in the Regulation B required adverse action notice? 4. Thelma White, a loan officer at Downtown Bank, is meeting with Larry Cook, a retired schoolteacher. 5. 3339(3). An appraisal performed by a State certified or licensed appraiser is required for all real estate-related financial transactions except those in which: (1) The transaction is a residential real estate transaction that has a transaction value of $400,000 or less; (2) A lien on real estate has been taken as collateral in an abundance of caution; 11. During the loan interview, Richard expresses concern that Ms. Cooper may not qualify for the loan based on her current income and asks if her husband can cosign the loan. From the Preamble of the Reg B Valuation Rules: The final rule maintains comment 14(a)(1)-2, pertaining to credit renewals, with minor changes for consistency and clarity. For example, an applicant who puts down his home as collateral will have additional information collected for monitoring compliance. Which option correctly lists two credit processes covered by the ECOA? Specified trigger events require a US public company to file an 8-K within four business days to report the event and provide certain related information. Chip Dawson is a loan officer at Anytown Bank. When it comes to credit transactions, a creditor cannot discriminate:, Regulation B also mandates that lenders provide oral or written notice of rejection to failed applicants within 30 days of receiving their completed applications. Finally, he tells her she will need to include information about her race, sex, marital status, and age on the loan application. Under Regulation B, a lender may not request information about an applicant’s sex, national origin, color, or other information not related to creditworthiness. However, there are certain times when such information can be collected from the applicant. Contains the CFPB rules regarding the provision of appraisal reports and other written valuations to consumers by creditors 12 CFR § 1026.42 – CFPB – Valuation Independence Establishes the valuation independence standards, including the requirements for the payment of reasonable and customary fees, applicable to institutions regulated by the Consumer Financial Protection Bureau Unfortunately, the CDD rule does not have a prescriptive list of events that will trigger the review of beneficial ownership information for existing business accounts. Home Appraisal Rules. Rick Keenan, a loan officer at RightWay Bank, is meeting with Linda Jones, a retired school administrator. 7. Creditors that fail to comply with Regulation B are subject to punitive damages. We also reference original research from other reputable publishers where appropriate. An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction. Brandon reviews the completed application and decides to make a counteroffer for a loan and calls Ms. Boyd to tell her the counteroffer and she accepts. Reg B Valuations - What is not considered a valuation? 9. Which one triggers the Reg B appraisal rules? Common themes in performance appraisals focus on employee attitudes such as reliability, dependability, and integrity. A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling. The creditor is required to notify the applicant in writing of the right to receive a copy of the appraisal or valuation. Carmen is interested in a home equity line secured by her home. The new appraisal rules are effective for any mortgage loan application received on or after January 18, 2014. Mateo needs to provide the customer with a free written valuation of the property. Which option lists two circumstances under which you can consider the age of a credit applicant? Marital status is also required if the applicant resides in a community property state., A creditor may only request information from a loan applicant’s spouse if:. The initial final rule was issued in January 2013. Regulation B covers the actions of a creditor before, during, and after a credit transaction. Regulation B's prohibition of advertising that would discourage potential applicants from applying for loans is a crucial part of redlining cases. Which comment was a violation? Other items of Form 8-K refer also to majority-owned subsidiaries (such as Item 2.01). 1376, codified at 12 U.S.C. An inquiry about loan rates and terms C. The refinance of a 20-unit apartment complex D. An application for an auto loan if the applicant plans to live in his car The NCUA’s left provisions in 701.31(c)(5) that would still require FCUs to provide copies of appraisals upon request for member’s whose loan application was for a subordinate lien item. 8. When Acme Bank sends Rochelle the Regulation B required adverse action notice, what additional information must be included in that notice? Rolf has seen four customers today who were applying for loans. The Equal Credit Opportunity Act (ECOA), enacted in 1974, and its implementing rules (known as Regulation B) prohibit creditors from discriminating on the basis of race, color, religion, national origin, sex, marital status, age (provided that the applicant has the capacity to contract), because all or part of an applicant’s income derives from public assistance, or because the applicant has in good faith … An appraisal, shouldn’t be a rigid document and process with a one type fits all approach (which is it why can’t be something HR are fully responsible for). Applications, Adverse Action & Appraisals/Evaluations . Federal Reserve. However, we are seeing some confusion with the timing requirements, so here is some information that hopefully clarifies the timing. Ms. Cooper wants a loan to make repairs on her house. Viewing 2 posts - 1 through 2 (of 2 total) Author. Karen has recently married and wants to have her new husband added to the equity line to help him build credit. Q: What is not considered a valuation? The Reg B appraisal rules are triggered by what event? and appraisal copy requirements of a Dodd-Frank Act amendment to the Truth in Lending Act (TILA) applicable to higher-risk mortgages. The Reg B appraisal rules are triggered by what event? After she explained her plans to Mark, the loan officer, he told her that it was the bank's policy to require a written application for all small business loans, and handed Betsy an application form. Now that the rules have been in place for a year reports of violations are filtering in from examiners and auditors. Ms. Jones wants a loan to purchase a new condo in a retirement community. Brandon Thomas, a loan officer at Sideways Bank, is meeting with Kelli Boyd, a 95-year old retired interior designer. Tagged: refinance, Reg B, valuation. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 1. Unlike the RESPA-TILA three-day rule, the Appraisal Rule does include a waiver provision. TheBank. 53580 Federal Register/Vol. Josh Johnson applied for a home equity loan at his neighborhood bank. He has accepted a real estate loan application from his customer, Jill Dickinson, who wants to refinance her first mortgage. An appraisal needs to consider the individual, the manager and the department. In finance, the term adverse action refers to a type of notice given by a lender when a borrower's credit application has been denied. By definition…that’s an appraisal. Creditors can ask about the number of children, their ages, and the borrower's financial obligations relating to the children. Based on your understanding of Regulation B, which option correctly lists two instances of age consideration that were legal? Richard Nuanes, a loan officer at Community Bank, is meeting with Louise Cooper, a retired schoolteacher. It includes any estimate of the value of a dwelling developed in connection with an application for credit. What action must the bank take? The spouses of rejected married applicants also have the right to this information. The results are as expected - most creditors are complying with the new rules but some seem a little confused by the requirements. Without Regulation B's explanation requirement, many potential borrowers with errors in their credit reports would become discouraged and give up. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)," Page 3. Based on what you know about the purpose of the Act, what is the likely focus of the compliance officer's concern? The final rule increases the threshold level at or below which appraisals are not required for commercial real estate transactions from $250,000 to $500,000. By using Investopedia, you accept our, Investopedia requires writers to use primary sources to support their work. "Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B)." Two weeks later Ms. Boyd signs the loan documents and begins her home repairs. Regulation B prohibits creditors from discriminating the creditworthiness of applicants with regard to their race, color, religion, national origin, sex, marital status, or age. She has a written business plan and knows exactly how to solicit donations from participating businesses, and already has some businesses lined up. Betsy Call is an astute businesswoman with years of retail experience. The appraisal notice under Regulation B is triggered by the receipt of an application for credit to be secured by a first lien on a dwelling. Karen inherited a house from her parents, who are now deceased. Under RESPA, for example, you have an application when you have specific pieces of information; which includes a property address. Home appraisals are required for all first mortgages. Overview of the Regulation B 30-day Rule. Mr. Cook wants a loan to buy a used car. Carl's Other Events. Jerry's job includes many credit activities. Compliance > Regulation B - ECOA. Furthermore, an applicant's age can be requested if it appears that they cannot legally sign a contract. That means any feature that is not related to consumer credit cannot be used when making loan approval decisions.. 6. Although Rick generally cannot ask for any prohibited information, he can collect certain data from applicants applying for a loan to purchase or refinance their principal dwelling. There are many different types of credit. It was supplemented with additional information. Participant. Unlike TRID rules under Regulation Z which clearly define a completed application as having received six pieces of information (name, income, SSN, address, loan amount, and estimated property value), Regulation B provides latitude for establishing what a financial institution considers to be a complete application. In response to the recent mortgage crisis, Congress amended the Equal Credit Opportunity Act (ECOA) to require creditors to automatically provide applicants with a copy of appraisal reports and valuations prepared in connection with certain mortgage loans. Thus, we have to look at the definition of “application”, which can differ depending on which regulation you’re looking at. Keymaster. Which option correctly lists a responsibility of Jerry's job that is covered under ECOA? He also asks how many children she has and if she plans to have more. This topic has 3 replies, 2 voices, and was last updated 6 years, 5 months ago by rcooper. Over the past month, National Bank has participated in several credit activities. To which type of credit does the coverage of ECOA and Regulation B apply? Richard violated Regulation B during his loan interview with Ms. Cooper. The value of the collateral securing the loan is a significant risk factor in real estate lending, so it is essential for banks to have adequate appraisal and evaluation programs in place. How long would the bank need to keep the loan documentation on file if Ms. Boyd did not accept the bank's counteroffer? This list also includes refinancing, credit applications, information requirements, standards of creditworthiness, investigation procedures, and revocation or termination of credit. The OCC, Board, and FDIC (collectively, the agencies) are adopting a final rule to amend the agencies' regulations requiring appraisals of real estate for certain transactions. A. Thus, we have to look at the definition of “application”, which can differ depending on which regulation you’re looking at. In general, the revisions to Regulation B require creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection … A new home appraisal rule just went into effect—the first time in 25 years that “federal regulators have increased the property value limit of the homes that require an appraisal as part of the selling process,” said REALTOR® Magazine. 3356. That is my thought as well. Then he added, "I think filling this out is a waste of time—this bank will never loan money on such a risky venture." Accessed Sept. 4, 2020. Which option lists possible consequences the bank might be subject to if Carmen sues the bank due to Mark's inappropriate questions? Federal Reserve. The age of a credit applicant can be considered under certain circumstances. Reg B mandates that lenders provide explanations to rejected applicants within 30 days of receiving their completed applications. Creditors that fail to comply with Reg B will be held liable for punitive damages up to $10,000 in individual actions. (a) Providing appraisals and other valuations. Employee Appraisal Phrases: Reliability, Dependability, Integrity. 4 Public Law 111–203, 124 Stat. For class actions, the creditor could face a penalty of $500,000 or 1% of the creditor’s net worth, whichever is lower. The Regulation B 30-day rule sets forth the requirements of a financial institution for notifying applicants of their credit decision. Unfortunately, this rule is not a simple as it may seem, as there are several parts to this rule. Michael Richards, a loan officer at Uptown Bank, is meeting with Karen Yates, a graduate student at a prestigious university. Ms. Boyd wants a loan to make repairs on her house. If a request is denied, Regulations B and V adverse action timing and notification requirement should be followed. The results are as expected - most creditors are complying with the new rules, but some creditors seemed to be a little confused by the requirements. 7. February 6, 2014 at 6:52 pm #5315. rcooper. Federal Reserve. Reg B Appraisal Rules – Esign. Deferments, extensions and modifications are requests for credit under Regulation B, so joint intent rules apply. Which statement is accurate regarding this request for information? Which method is the bank most likely using? TILA section 129H(b)(4)(A); 15 U.S.C. July 17, 2013 at 3:18 pm #3635. An application for credit that is to be secured by a first lien on a 1-4 family dwelling B. Consumer Credit Protection Act of 1968 (CCPA), Federal Fair Lending Regulations and Statutes: Equal Credit Opportunity (Regulation B). This topic has 1 reply, 1 voice, and was last updated 6 years, 10 months ago by rcooper. 1639h(b… ECOA (REG B) VALUATION RULES & TILA (REG Z) HPML APPRAISAL RULES (Effective ... 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